On October 17, 2022, the Committee submitted a legal memorandum to Chair Gensler of the Securities and Exchange Commission (the “SEC”) regarding the SEC’s statutory authority for its recent rulemaking proposal on “Private Fund Advisers; Documentation of Registered Investment Adviser Compliance Reviews” (the “Private Funds Proposal”).

In the memorandum, the Committee presents its analysis of why the sections of the Investment Advisers Act of 1940 (the “Advisers Act”) that the SEC cites as authority for its proposed prohibition on private fund adviser indemnification do not authorize such a prohibition. Although this memorandum focuses on only one narrow aspect of the proposal, the Committee continues to believe that the SEC lacks statutory authority for various other aspects thereof, as further discussed in the Committee’s previous comment letter on the Private Funds Proposal.

The full letter is available here.